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Strategic Human Resource
Management and Firm
Effectiveness in Industries
Experiencing Decline*
Deborah Smith Cook
and Gerald R. Ferris
Unstable economic conditions, in conjunction with other external and internal influences,
have prompted attempts to understand the nature of organizational decline. While
a number of issues have been carefully considered in recent theory and research, little
effort has been made to consider the implications of human resource management practices
for firms in declining industries. The present study examined human resource practices in
three industries that experienced decline, and investigated the relationship of organizational
performance with effective human resource management.
Awareness that the strategic management of human resources can be
an effective mechanism for coping with environmental change has
grown in the past few years (Alpander, 1982; Devanna et al. 1981; Dyer,
1983; Miles and Snow, 1984; Tichy and Barnett, 1985). Organizations
that link their strategic planning with human resource needs likely perform
better than organizations that fail to recognize the importance of
this asset.
When organizations operate in industries with lower economic returns,
the effective use of all organizational resources becomes critical.
Yet, the strategic use of human resources is typically an afterthought in
most turnaround strategies. Ferris et al. (1984) argued that human resource
strategies should vary according to the conditions of decline. In
this exploratory study, high and low performing firms in three declining
industries were examined for differences in their use of their human
resources.
STRATEGIC HUMAN RESOURCE PRACTICES
Traditional management thought has neglected human resources as a
strategic asset to be managed as effectively as financial and technological
assets. To remedy this oversight, academicians and practitioners began
* This study was supported by a grant from the American Society for Personnel
Administration.
Human Resource Management, Fall 1986, Vol. 25, Number 3, Pp. 441-458
© 1986 by John Wiley & Sons, Inc. CCC 0090-4848/86/030441-18$04.00
to identify ways in which human resources could be viewed strategically